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How to get your finances in order before you quit or switch careers

Here’s how to financially prep for this period of flux.

How to get your finances in order before you quit or switch careers
[Photo: Skitterphoto/Pexels]

Staying at a job that makes you unhappy isn’t just painful and uncomfortable. It can wreak havoc on your mental health, lower your productivity, and make you doubt your ability. The same is true for remaining in a field that no longer serves your passion.

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So when that urge comes along to jump ship, return to school, or pivot to a different industry, it’s compelling to dive right in. Unfortunately, most of us can’t afford to quit our gigs and be income-free for an undefined period of time. Here’s how to financially prep for this period of flux:

Start saving as soon as possible. 

Though this is pretty much a no-brainer, consumer analyst and money expert Julie Ramhold says the first step to taking any risk is building your nest egg. If it takes longer to find another opportunity that fits what you’re looking for, it’s important to be able to meet your living expenses without worry. Or, if you’re going to switch careers totally, you may be “out of work” while you brush up on new skills for an extended period. If this is the case, going into squirrel mode will serve you—and your bank account—well. Though it may not be possible, Ramhold suggests erring on the side of being overly cautious and start saving more around a year before you plan on making a big change.

“Your goal should be to cover monthly expenses for as long as you can, so if you plan to be out of work for six months, make sure you have enough put away to cover those six months and then some, like emergencies that could pop up,” she explains. “Doing so will mean you’re prepared for whatever life throws at you when you don’t have a job or you’re still getting settled in a new one.”

Check in with your relationship with money.

As you begin to develop your exit strategy, remember that throwing a grenade into your current professional life isn’t just a threat to your wallet; it can be a threat to your psyche, too. That’s why the CEO of EnrichHer, Roshawnna Novellus, suggests checking in about your mentality toward money. Does discussing finances stress you out? Do you have anxiety thinking about not knowing where—or when—your next income stream will arrive?

The more you can mentally prep yourself for this uncertainty, the better equipped you’ll be to deal with any emotions that bubble up in the process. “It’s important to have your financial affairs in order for many reasons, including peace of mind, reduced stress, and providing yourself the ability to focus,” says Novellus. “If your personal relationship with money isn’t good, it might cause a lot of turbulence when doing something new.” 

An impactful way to examine your triggers and build confidence in your ability to weather this transition is to connect with like-minded people. Joining circles of entrepreneurs who took similar leaps of faith or seeking out mentors who can provide an outsider’s perspective can be encouraging.

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Dabble with a side hustle in the interim. 

Depending on the type of transition you’re making, going from working 60-hour weeks to having some idle time will be a shocker. And though you’ll likely enjoy it for a hot second, you will probably start to feel antsy, fast. That’s why Ramhold suggests picking up a side hustle or consulting work while you’re preparing for your move. Not only will this help to fill your time—since no one can send out résumés eight hours a day, five days a week—but it will bring in some extra cash to fill the void.

Determine your needs, and then cut that figure down.

What you spend right this second when you’re gainfully employed isn’t exactly what you’ll charge on your credit card once you put in your two-week notice. Ramhold says one of the most effective ways to create a financial road map for your period of unemployment is to tally up your weekly and monthly expenses. With that figure in mind, you can start to make cutbacks that result in savings and give you more wiggle room while you search for a better job fit. And while most folks are quick to take a red pen to their daily Starbucks habit, Ramhold says other recurring fees are actually much more expensive—and many are unneeded. 

“Maybe you only want Netflix for the latest season of You. In that case, binge the show and put your subscription on hold until later. Maybe you aren’t actually using Amazon Prime benefits enough to justify the $119 yearly cost, in which case you should consider canceling that and putting that saved [money] away,” she says.

If you’re going to cut back on subscriptions, Ramhold says it’s a better idea to do it now, rather than when you quit. This gives you time to adjust and to understand the realities of your new normal. “This works because it allows you to embrace frugal living before you’re forced to, so that when it’s no longer a choice, it’s not a stressful transition,” she explains. “Figure out where you can make cuts, and do it without hesitation.”

Make use of your benefits before you leave.

Venturing into the turbulent world of being your own boss comes with a new list of responsibilities, including figuring out healthcare. If you’re leaving a gig before you know what your next offer will be, it’s impossible to predict what doctors will be in-network or not. That’s why it’s time to start booking all checkups ASAP so you won’t have to pay as much out of pocket in the interim.

Ramhold also suggests hoarding any maintenance medications you take monthly, by giving your doc a heads-up on your upcoming moves. “Your goal here is to just be prepared by having a stockpile of your necessities so that you don’t let your health take a backseat when making a big change in your life,” she says.

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Pay off any debts that you can.

When you’re trying to save as much as possible, putting more money toward a student loan or credit card bill may feel unproductive. However, Ramhold says that’s far from the truth, since interest can take away from your bottom line, fast. “The worst thing is to suddenly realize your safety net isn’t so strong because you forgot to account for a bill or something similar,” she says.

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